US tariff cut to boost Indonesia's economy: DEN

Jakarta (ANTARA) - Reduction of the tariff rate imposed on Indonesian products entering the United States, from 32 percent to 19 percent, could help boost Indonesia's economic standing, National Economic Council (DEN) Chairman Luhut Binsar Pandjaitan stated.

Pandjaitan emphasized that the government’s success in securing the lower rate is part of strategic steps to strengthen supply chains, attract investment, and boost Indonesia’s position as a respected trading partner.

“We are not just rolling out the carpet for foreigners — we are opening more avenues for Indonesian products and businesses to compete globally. This is part of our economic diplomacy with long-term goals rooted in national interests,” he noted in a statement on Thursday.

Under the latest Indonesia-US tariff deal, he affirmed that the Indonesian government aims to tackle tariff barriers for various US products to ensure mutual benefits.

“This policy is not a one-sided concession — it is a strategy to open investment opportunities, drive technology transfers, and expand the reach of Indonesian products in a more competitive way,” he stated.

He explained that DEN had conducted economic simulations comparing the impact of 32-percent and 19-percent rates, indicating that the lower rate is more advantageous for the national economy.

With the 19-percent tariff, Indonesia’s gross domestic product is projected to grow by 0.5 percent, driven by an expected increase in investment as global companies relocate manufacturing facilities to Indonesia.

These facilities will likely focus on labor-intensive sectors such as textiles, garments, footwear, furniture, and fisheries.

Additionally, Indonesia’s workforce absorption rate could rise by 1.3 percent, which in turn would boost people’s welfare.

Pandjaitan underlined that DEN views the tariff cut as momentum for Indonesia to accelerate its deregulation agenda and lower domestic logistics and production costs.

“DEN believes that on-point, data-based national economic policies will be key to driving inclusive and competitive economic growth,” he concluded.